Talking about MM, CD, savings type interest. My money market interest rate have tripled in the last month, still extremely low at 0.73% but it is climbing. Locally a bank has started a special on a 18 month CD at 1.85%. I really don't see regular MM accounts getting much higher than this but I don't know, why I'm asking. If and what percent should I tie up in this CD? How high do you think rates will go? This is my safe money, as safe as it gets anyway, if the markets crap out I want this money to fall back on. Going to retire in about 2 years. I am still heavily invested in many aspects of the market but don't plan on putting any more in at this stage of my life. I'm already maxed on I bonds.

Some online banks have savings account rates over 2.00%. Better than 1.85% with no early withdrawal penalty.

The Fed's interest rate will probably still go up a little, just not skyrocket like it has over the last half year. They are walking a tight rope between trying to tame inflation and stopping the weak economy from recovery. There is nothing in the economic playbook for what we are experiencing now. Economic indicators are all over the place and not making any sense.
For your impeding retirement, I dunno. WIsh I could help you more.

"To the Moon, Alice! To the moon..."

(Loans, not investments)

Find an online bank that has FDIC insured accounts and just shop for the rate and length you want.
Just understand that with the present inflation rate, any of these are just safe holding accounts and are loosing a good bit, plus you pay taxes on the supposed gain each year.
Too many moving parts to the equation right now.

quote:

Originally posted by Angus the Kid:
Some online banks have savings account rates over 2.00%. Better than 1.85% with no early withdrawal penalty.

This. Weathhfront's individual cash account has 2.00% interest right now. You can even set it up as a checking account with zero fees.

The only caveat is that the interest rate isn't locked in like a CD, which could be a good or bad thing. If interest rates go up, so will yours, if they go down, so will yours.

If you have a stash of cash that you have no expectation of need for at least a year, look at treasurydirect.gov, specifically Series I treasury bonds.

These have been around since 1999, nothing new. Intended for individual investors. The interesting part is that the rate of return is linked to inflation via the Consumer Price Index, adjusted twice annually.

Current yield is 9.62%.

Each individual may purchase up to $10,000 in I-bonds annually via the website, linked to your bank account. Funds are locked in for the first year (no withdrawals), then another 4 years with penalties for early withdrawal (prior 3 months interest). After 5 years there are no penalties for withdrawal.

Interest is subject to federal income tax, exempt from state or local taxes. Interest may be declared annually on your tax return, or deferred until withdrawal in the future.

Kind of like a super certificate of deposit account (similar terms and early withdrawal provisions). Two differences: (1) interest is about 6 or 7 times any CD available, and (2)no worries about FDIC insurance because this is the United States Treasury.

For the math-challenged, at current yield of 9.62% your investment will double in 7.5 years (assuming no withdrawals).

US citizens and legal residents only. No guarantee of interest rates (but who thinks that inflation is a short-term thing, huh?). US Treasury bonds, so full faith and credence on the account.

Want to give one as a gift (child, grandchild, etc)? No problem, not subject to your personal annual limit (recipient is subject to the same limit).

Each individual may purchase another I-bond up to $5000 annually if done with your income tax refund.

I didn't believe it when I heard about it, but go to the website treasurydirect.gov for all your questions. Meanwhile, wife and I are in for $10K each this year and ready to double down after January 1 for the next year of Brandon's nonsense.

Repeat, no typo or mistake, current interest rate is 9.62%! Locked in for the first 6 months. Adjusted every May and November for the coming 6-month terms (and the CPI is up again right now).

Me thinks the 50 point hike in September will be the last for a while and then they will start going down again in 2023.

Historically, the Prime lending rate by the Fed has to equal or exceed the rate of inflation to bring inflation under control. Now the Fed has no desire to further thank the economy, but they will have to increase the Interest rates at some point.

My BIL was talking about those Federal I-Bonds discussed above as well. Seems like a pretty safe place to put some money for a good rate. You can't beat the return.

It recently came to my attention that CD rates at the big firms like Fidelity have improved.
A few years ago I was laddering CD's with my MM type money. Frankly at the point things went to .15% and less I stopped because it frankly wasn't worth my effort to administer.
Last week I revisited it at Fidelity. Rates have improved significantly. 3 months at 2.4% and 1 year at 3.1%. At least worth messing with now.
1 year Treasuries are paying a touch more than that as well.

In the Original Post in this thread, 08 Cayenne said "I'm already maxed on I bonds."

Two replies have suggested I bonds. WTF?

quote:

Originally posted by V-Tail:
In the Original Post in this thread, 08 Cayenne said "I'm already maxed on I bonds."

Two replies have suggested I bonds. WTF?

The good news is the response was very well written and informative. I was not aware of this:

"Each individual may purchase another I-bond up to $5000 annually if done with your income tax refund."

Thanks LoboGunLeather for the information on the link to the treasury website.
I have been looking at the site this morning and it looks like it may be a good place to put some investments money other than the market.
I never thought of bonds paying this good of an interest rate. I did not know the rate could vary based on the inflation rate.

quote:

Originally posted by Nuclear:
Historically, the Prime lending rate by the Fed has to equal or exceed the rate of inflation to bring inflation under control. Now the Fed has no desire to further thank the economy, but they will have to increase the Interest rates at some point.

Do you have a reference or citation for your statement that “Historically, the Prime lending rate by the Fed has to equal or exceed the rate of inflation to bring inflation under control?” Because I have never heard that in my years of studying economics and the Federal Bank.

If you’re saying that they raise interest rates which shrinks the money supply which constrains economic activity and, in turn, inflation then you are right. But the Fed doesn’t set interest rates to equal or exceed inflation. Previous to Trump, the Fed rate was near zero and below the inflation rate. Even now, the Fed rate is well below the inflation rate which itself is understated.

I remember before the housing market crash, I had rotating 1 year CDs at 7% and higher. I was I had locked in some of them for five years. That was when gold was at a low of $300 an ounce before shooting up to $1600

I actually have a degree in economics. (Which, next to a bachelor's degree in psychology is about the most worthless undergrad degree you can have.)

But it gives me the chance to say:

Rates will go up. On the other hand, they may go down.

This is a very old joke about equivocating economists, and "Will someone bring me a one-armed economist." But it IS very hard to make predictions, especially about the future.

quote:

Originally posted by V-Tail:
In the Original Post in this thread, 08 Cayenne said "I'm already maxed on I bonds."

Two replies have suggested I bonds. WTF?

Yes, they deserve threads of their own. I just purchased $10K worth myself.

quote:

Originally posted by jhe888:
I actually have a degree in economics. (Which, next to a bachelor's degree in psychology is about the most worthless undergrad degree you can have.)

Hmmm. I have a degree in economics as well. No experience of psychology though. I had supposed that psychology might actually be less useless than economics as it might lend some insight into better understanding how others think. Maybe not.

Econ though allows you to make confident predictions once you bake in so many assumptions as to render you model entirely worthless in the real world…

quote:

Originally posted by V-Tail:
In the Original Post in this thread, 08 Cayenne said "I'm already maxed on I bonds."

Two replies have suggested I bonds. WTF?

Please excuse me for discussing Series I treasury bonds and boring you with the information. I recently discovered this opportunity and have discussed it in detail with several knowledgeable people in the financial business, none of whom were remotely aware of this possibility for individual investors. I thought I might share it here on the forum for others who might appreciate the chance to earn several times the rate of return for CD and money market accounts, and do so with funds guaranteed by the US government.

WTF, I'm a retired millionaire. I probably know far less than many other people. But, WTF, why not share a little useful information that might help a few people make good decisions? WTF, over.